Valuation of interest free loans
This query is : Resolved
13 February 2014
Kindly guide me with an example as to how to calculate interest free loans provided by the employer to the employee.
What should be the rate of interest charged for the same, and how is it treated in calculating the TDS of employee for the month of March'14
Thanks
Swati
What should be the rate of interest charged for the same, and how is it treated in calculating the TDS of employee for the month of March'14
Thanks
Swati
13 February 2014
It is benchmarked against sbi lending rate. Every year this rate is notified for income tax purposes.
the interest chargeable at sbi rate less any interest charged by the employer is added to the perquisites.
the interest chargeable at sbi rate less any interest charged by the employer is added to the perquisites.
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13 February 2014
Thanks a lot..
Please also let me know sbi lending rate for AY 2014-15
Please also let me know sbi lending rate for AY 2014-15
13 February 2014
I agree with Nikhil Kaushik.
In your case, since it is interest free. Perquisite would be calculated directly on the SBI lending rate existing as on 1st April of the previous year.
One important point to be noted, in case of any repayments, calculation of interest has to be done on a monthly basis. Ie the balance of loan outstanding as on the last day of a particular month should be considered and then calculations should be done... hope that resolves your query....
In your case, since it is interest free. Perquisite would be calculated directly on the SBI lending rate existing as on 1st April of the previous year.
One important point to be noted, in case of any repayments, calculation of interest has to be done on a monthly basis. Ie the balance of loan outstanding as on the last day of a particular month should be considered and then calculations should be done... hope that resolves your query....
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14 February 2014
Thanks Nikhil & Anand for the valuable inputs.
Please also guide me as what is the rate of interest of SBI as on 01.04.2013. I am not finding it correctly anywhere.
Please also guide me as what is the rate of interest of SBI as on 01.04.2013. I am not finding it correctly anywhere.
14 February 2014
Dear Swati,
please refer www.caclubindia.com/forum/sbi-interest-rate-1-april-2013-281641.asp#.Uv3Vvc4kQp8
if the loan is for general purpose, you need to apply 14.70%
please refer www.caclubindia.com/forum/sbi-interest-rate-1-april-2013-281641.asp#.Uv3Vvc4kQp8
if the loan is for general purpose, you need to apply 14.70%
14 February 2014
By the way Anand...Hi..how are you? I didnt knw you joined Piramal after EY.
17 February 2014
If the loan is for medical purpose for the purpose other than the medical treatments mention in Rule 3A, then what rate of interest to be charged.
17 February 2014
well then it should be covered under demand loan only 14.70% p.a
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